Our opinion on the current state of DNB

Deneb (DNB) is a 67,8% subsidiary of Hosken Consolidated Investments (HCI), listed on the JSE under specialty financial services. Deneb is an investment holding company with four divisions - (1) a property portfolio in Natal, the Western Cape and Gauteng worth about R1bn, (2) a branded products division which supplies toys, electronics and stationery, (3) a manufacturing division which produces products for the mining, agriculture, construction and automotive industries, and (4) a textile division which makes cotton, worsted and polyester fabrics. In its results for the year to 31st March 2023 the company reported revenue up 14% and headline earnings per share (HEPS) down by 15%. The company said, "During the year, Deneb received insurance proceeds for business interruption and flood damage. As these proceeds are non-recurring, we are of the opinion that providing earnings on an adjusted basis is meaningful disclosure to shareholders: Adjusted headline earnings per share (“HEPS”) decreased by 15 cents per share (45%) to 18 cents per share, from 33 cents per share in the prior corresponding period". In a trading statement for the six months to 30th September 2023 the company estimated that HEPS would fall by between 26% and 46%. The problem with this share is that it is extremely tightly held and therefore not practical for private investors.